Nearly $1 Billion Overpaid To IRS. Is It Your Money?

The easy way out almost never pays off—especially at tax time

Many taxpayers choose simplicity over savings by taking the standard deduction when they file their income taxes. As a result, 2.2 million taxpayers overpaid their taxes by nearly $1 billion, according to a General Accounting Office study conducted several years ago. The report has not been updated since its original release.

Granted, taking the standard deduction is easier than itemizing. But is that worth Uncle Sam keeping (on average) $438 of your hard-earned cash?

How To Get Your Money Back

You have three years from the original filing deadline, so, for example, if you want to amend your 2009 return, you have until April 15, 2013. To get back lost tax money, file an amended return using Form 1040X and work with a tax professional. You’ll be able to cancel out your standard deduction and list all the tax credits and deductions you should have taken.

Missing Easy Money

According to the GAO study, 61% of homeowners missed deductions for mortgage interest, real estate taxes and state and local income taxes—three simple deductions. In fact, the records you need to claim these deductions are sent to you every year.

Charitable contributions account for another 27% of missed deductions. Even if you can’t find receipts of your charitable donations, at least review your bank statements for eligible deductions.

If you haven’t taken these deductions in the past, chances are you overpaid.